TDS Telecom Q1 revenue gets lift from broadband bundles, managedIP services

TDS Telecom, the wireline ILEC division of Telephone & Data Systems (NYSE: TDS), has cooked up a recipe of business and broadband services that continues hit the spot, as operating revenues rose 3 percent to $204.1 million in the first quarter of 2012.

As seen in previous quarters, the growth drivers in TDS Telecom's wireline business continue to come from triple-play voice, video and broadband bundle. In Q1 2012, ILEC triple play penetration increased to 30 percent, up from 26 percent.

Likewise, managedIP connections, while still a small part of their business, grew 88 percent, to 64,500, from 34,400 in both its ILEC and CLEC business units.

"TDS Telecom's first quarter performance was highlighted by the growth in Hosted Managed Services (HMS) revenues, primarily provided by our acquisition of OneNeck in June of last year," said Vicki Villacrez, TDS Telecom CFO and vice president of finance, in the earnings call. "ILEC and CLEC connections continue to decline, but the rate of ILEC physical access line lots moderated slightly. We are generating continued strong growth in our commercial managed IP products and services, initial residential IP TV connections and Triple Play Bundles."

Here's a quick breakdown of the ILEC's key metrics:

  • Landline Losses: During the quarter, ILEC physical access lines declined 5 percent, ending the quarter with 363,500 total physical lines. However, the advent of its star voice packages has helped it mitigate line loss. As of the end of March, the telco had 201,000 customers, or 57 percent of its residential customer base, subscribing to these plans.
  • Business Services: The key driver of its business services segment continues to come from its still relatively new Hosted and Managed Services (HMS) business, one that was bolstered via its acquisition of OneNeck in June 2011. HMS revenues were up $11.3 million, a factor it attributed to the acquisition of OneNeck.
  • Broadband and video: Broadband data and video continues to be a growth factor for TDS as it ended the quarter with 219,500 broadband subscribers and 4,900 IPTV subscribers. It reported that 65 percent of residential broadband subscribers taking a 5 Mbps or higher speed and 20 percent are using a 10 Mbps and above connection. In parallel with its IPTV rollout, which it previously said it plans to deliver in an additional 19 markets this year, TDS is offering up to 25 Mbps in its copper-based markets and up to 50 Mbps where it offers Fiber to the Home (FTTH). It reported that customer churn amongst triple play customers has remained low at about a rate of 1.5 percent per month.

TDS Telecom's parent Telephone and Data Systems Inc. reported operating revenues of $1.30 billion for the first quarter of 2012, up 4 percent from $1.25 billion in Q1 2011.

The service provider has maintained its revenue guidance for 2012 that it provided on its Feb. 24 fourth-quarter 2011 earnings call.

TDS shares closed at $23.00, up $0.17, or 0.75 percent, in after hours trading Friday on the New York Stock Exchange.

For more:
- see the release

Special Report: Wireline in the first quarter of 2012

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